NYSSREA in 2009: A year in review

Looking back on the past nine months since I took office, I can tell you that it has been an honor to serve as you president. It has also been a whirlwind experience given the many issues our organization has attempted to address. As a professional organization, it is important for us to voice our concerns on matters such as the Home Valuation Code of Conduct (HVCC), mandatory licensing in New York State, and Broker Price Opinions (BPOs). The dedicated efforts of the leadership team and support staff have been invaluable in dealing with these significant issues that affect our profession.

By conducting open forums at the NYSAR business meetings, attending office meetings and local board meetings to receive feedback on the Home Valuation Code of Conduct, I was able to share the pertinent information gathered with a panel of industry leaders during the National Association of REALTORS Convention in San Diego last month.

Individuals on the “Managing the Risks and Opportunities of the New Home Valuation Code of Conduct” forum were: Alfred Pollard of the Federal Housing Finance Agency; Danny Mendez of the Federal Housing Agency; Jacqueline Doty of Freddie Mac; Robert Murphy of Fannie Mae; Penny Triplett, CRS, GRI, REALTOR; and Mark Johnson of LSI, a division of Lender Processing Services. I was given the opportunity to testify before the panel as to what we have done as an organization. We discussed future steps to try to resolve some concerns. Educating REALTOR salespersons about enforcement and the issue of geographic competency was of those concerns.

The HVCC agreement is to expire in July of 2010 and the Independent Valuation Protection Institute (IVPI), which was announced as an integral part of the HVCC, has not been implemented. The purpose of the IVPI is to receive complaints from appraisers and users of appraisal services on the improper influence or attempted improper influence of appraisers. No date has been set for the institute being offered to the public.

Mandatory licensing has been on the forefront of our radar for some time now and although there has been no activity in the Capitol, our organization has decided to make the issue a priority. We will continually make our support of mandatory licensing known through the New York State Appraisal Board.

Broker Price Opinions were a hot topic at the NAR Convention in San Diego as well. With the formation of the REALTORS Property Resource (RPR), a database for members at the national level, information will be offered on all properties nationwide by combining tax records and local MLS information. The RPR is newly developed and there are still many questions on how this database might work. Click herefor more details.

Keep an eye out for the NYSSREA appraisal tour that will take place in 2010. This will bring appraiser education to you and your local market.

Thank you again for allowing me to serve this great organization, and as I attend Triple Play this December and future Appraisal Board meetings, I plan to stay on top of valuation issues.

We have had another successful Fall Appraisal Conference at the Turning Stone Casino and Resort in Verona, NY. Conference Chair Robert Galliher, MAI, SRA, GAA put on a great show for those in attendance.

Those who were able to make it out for the golf portion of the conference enjoyed a competitive round on the Shenandoah golf course.

On October 22, the 2008-2009 version of the 7-hour National USPAP course was offered with instructor Jim Murrett, MAI, SRI. All appraisers are required to complete a 7-hour National USPAP Update Course in order to renew their license/certification.

We were pleased to invite Michelle Bradley of Czekalski Real Estate, Inc. from Natrona Heights, Pennsylvania to join us and teach “Current Appraiser Issues." Michelle Czekalski Bradley is a certified general appraiser and associate broker, an AQB Certified USPAP Instructor, a real estate educator and review appraiser. She has more than 20 years’ experience as an appraiser and practices in the western Pennsylvania area. The seminar covered minimum property guidelines for FHA and recent changes to them. It also covered minimum property guidelines for VA appraisals. Individuals were taught the special requirements for manufactured housing appraisals, the Home Valuation Code of Conduct and the 1004MC form were also discussed. Those in attendance did receive 5 hours of appraiser and real estate continuing education credit.

Overall the conference went extremely well with thanks to President Rebecca L. Jones and Conference Chair Robert Galliher. A special thank you also to Wayne Fienberg (immediate past president), for selling Camp Good Days and Special Times raffle tickets. NYSSREA was able to donate a sizable amount to this worthy cause.

Stayed tuned for details about the 16th Annual Arthur G. McCartney Spring Appraisal Conference that will be held in downstate New York in the spring of 2010.

Kelley receives President's Award

G. Richard Kelley, MAI, of Pomeroy Appraisal Associates, Inc. recently received the President's Award of the Upstate New York Chapter of the Appraisal Institute for his commitment, dedication and service to the appraisal profession. Kelley has been with the Pomeroy firm for 53 years. He is also a NYSSREA past president who dedicated so much of his time to our organization.

Starting in commercial-industrial sales and leasing, and progressing through various corporate responsibilities, he now serves as senior counselor with the Pomeroy firm, a full-time position that permits him to focus entirely on appraisal assignments. He is also an expert in USPAP compliance and serves as a regional advisor to the New York State Department of State, reviewing complaints filed against licensed and certified appraisers.

NYSSREA committees meet in Saratoga Springs

The NYSSREA education, scholarship, communication, legislative and nominating committees met on Sunday, September 13, in conjunction with the NYSAR Fall Business Meetings in Saratoga Springs, NY. Among the more prevalent topics of conversation were the 2010 appraisal tour of the state, scholarship recipients, NYSSREA website and the new HVCC.

In addition to the full slate of committee meetings, Domenic Zagaroli, GAA, ITI, offered "Appraisal report writing formats for private and lender clients," which was approved by the New York State Department of State for three hours of appraiser and real estate continuing education credit. Zagaroli covered the differences between private appraisals and mortgage lending appraisals.

Join the official NYSSREA Facebook group

REALTOR appraisers from across New York State can connect with each other and their state association by joining NYSSREA’s official Facebook group. The popular social networking site allows users to exchange information and connect with friends, family and colleges across the country.

NYSSREA’s official Facebook group will offer members up-to-date association information, access to event pictures and a place for industry-related discussion. NYSSREA members are encouraged to join the group and network.

Please note: When you click on the link, you will be prompted to login to Facebook or create a new account. Once you do so, you will automatically be redirected to NYSSREA's Facebook group. Once on the page, click on "Request to Join Group," which is located in the top, right corner of the page. Your request will then be approved by NYSSREA staff.

USPAP Q&A

An appraiser completed an appraisal for Client A. Client B received a copy of the appraisal from Client A and finds it acceptable for their purposes, but wants to be identified as the client in the appraisal report. Client B is aware that appraisers are prohibited from readdressing (or transferring) a completed report to a different client’s name. As a result, Client B would like to engage the appraiser in a new assignment, limiting the appraiser’s scope of work toonly identifying them as the new client. Can the appraiser complete the assignment from Client B under these terms?

No. USPAP requires the scope of work performed to produce credible assignment results. USPAP clearly establishes that the scope of work is determined by the appraiser. If a client’s instructions (i.e. assignment conditions) limit the appraiser’s scope of work in a new assignment to simply identifying a new client, the client, not the appraiser, has made the scope of work decision.

In addition, even if the appraiser accepted the client’s proposed scope of work as his or her own, that scope of work may not be adequate to produce credible assignment results as required by USPAP.

As is the case with all assignments, when a client’s assignment conditions are too restrictive to produce credible assignment results, an appraiser must decline or withdraw from an assignment.

I am aware of the ASB’s June 2008 Q&A which addressed the implementing regulation, 49 CFR Part 24, for The Uniform Relocation Assistance and Real Property Acquisitions Act of 1970, as Amended (the Uniform Act). The topic of this Q&A is the relationship of Standard Rule 1-4(f) and "Before Acquisition Value." The ASB pointed out that such a situation does not create a jurisdictional exception under USPAP, but is rather an assignment condition.

My state has a similar law that requires the appraiser to disregard any decrease or increase in market value of the property prior to the effective date of value caused the by the public improvement for which the property is being acquired. Is this state law a jurisdictional exception under USPAP?

Yes. This is an example where the Jurisdictional Exception Rule applies. In order to comply with the requirements of the Jurisdictional Exception Rule, the appraiser must disclose in the appraisal report the reason(s) that prohibit compliance with USPAP and cite the basis for the jurisdictional exception.

I was contacted by a sworn peace officer who simply requested the workfile of an assignment I had previously completed. The officer made this request without a subpoena or any form of court order. If the workfile contains confidential information, does USPAP allow me to comply with the officer’s request?

No. The state law is not a jurisdictional exception in this case. USPAP SR 1-4(f) becomes applicable in an assignment only if the scope of work includes the analysis of anticipated improvements:

When analyzing anticipated public or private improvements, located on or off the site, an appraiser must analyze the effect on value, if any, of such anticipated improvements to the extent they are reflected in market actions. (Bold added for emphasis)

As was pointed out in the June 2008 Q&A response, the key word in SR 1-4(f) is "When." Your state law does not conflict with USPAP because the word When indicates that SR 1-4(f) is only applicable in the circumstance that public or private improvements must be analyzed in order to develop credible assignment results.

The recently adopted 2010-2011 edition of USPAP that becomes effective on January 1, 2010, is intended to enhance clarity and understanding in application of the JURISDICTIONAL EXCEPTION RULE. While there are no new requirements, the following four steps have been added to the RULE:

In an assignment involving a jurisdictional exception, an appraiser must:

1. Identify the law or regulation that precludes compliance with USPAP.

2. Comply with that law or regulation.

3. Clearly and conspicuously disclose in the report the part of USPAP that is voided by that law or regulation.

4. Cite in the report the law or regulation requiring this exception to USPAP compliance.

I am aware that development of an opinion of market value also requires development of an opinion of reasonable exposure time linked to the value opinion. The assignment I am working on has an assignment condition under the Uniform Appraisal Standards for Land Acquisitions (the Yellow Book) that requires me to disregard any decrease or increase in market value of the property prior to the effective date of value that is caused by the public improvement for which the property is being acquired. My research indicates the time frames of buyers and sellers are often influenced by pending public improvement projects. Does this requirement represent a jurisdictional exception?

Yes. In this case, the implementing law for what is commonly known as the Yellow Bookprecludes you from complying with the USPAP requirement stated in the Comment to USPAP SR 1-2(c): which requires an appraiser to develop an opinion of exposure time when an opinion of market value is developed. In contrast, the Yellow Book provides that "the appraiser shall not link an estimate of market value for federal land acquisitions to a specific exposure time."

The Federal Highway Administration (FHWA) permits a "waiver valuation." To quote 49 CFR 24.102(c)(2), "The term waiver valuation means the valuation process used and the product produced when the agency determines that an appraisal is not required, pursuant to 24.102(c)(2) appraisal waiver." Is this an application of the JURISDICTIONAL EXCEPTION RULE?

No. There is no jurisdictional exception in the situation described. USPAP does not establish who or which assignments must comply. An agency may determine that an appraisal is not required for a specific situation, and may elect to rely on a waiver valuation.

An appraiser who is required to practice under USPAP, or chooses to do so, must still comply with USPAP. However, nothing in the definition of waiver valuation precludes the appraiser from complying with USPAP. Compliance with USPAP sometimes USPAP Q&A Page 4 Vol. 11, No. 10 October 2009 requires an appraiser to develop an expanded level of analyses, or communicate results with a different minimum set of requirements, distinct from what might be desired by a particular intended use or user. These additional obligations may impact an appraiser’s decision whether they choose to accept the assignment.

It is important that an appraiser take the time and effort to clearly understand all the assignment elements, and make an appropriate scope of work decision that complies with the appraiser’s obligation to be able to demonstrate that the scope of work is sufficient to produce credible assignment results.

The Federal Highway Administration (FHWA) publishes a "Guide for Preparing an Appraisal Scope of Work." One of the items listed is that the property being acquired should be "appraised as if free and clear of contamination," unless otherwise specified. Is this a jurisdictional exception, extraordinary assumption, or hypothetical condition?

This situation is not an application of the JURISDICTIONAL EXCEPTION RULE. Rather, if contamination is an aspect of the valuation, the situation calls for either an extraordinary assumption or a hypothetical condition. In the DEFINITIONS section, an extraordinary assumption is defined as:

an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.

A hypothetical condition is defined as:

that which is contrary to what exists but is supposed for the purpose of analysis.

If the contamination status of the property is uncertain and cannot be determined, an extraordinary assumption is appropriate. If the property is known to be contaminated, a hypothetical condition to the contrary would be required.